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The Bill, as the New Income Generating and Savings Provider Economy Package, Approved at the General Assembly

The Bill Pertaining to Amending Income Law and Some Other Laws was approved at the General Assembly of the Parliament...

Repatriation of Capital is extended until December 31, 2019, Central Bank reserve fund is decreased from 20% to 10%. Procedures and principles for restructuring of financial debts is envisaged to be determined in a Framework Agreement. Large-scale projects are granted time extension, to be used for both REZ (YEKA) Solar Power Plant concession and exemption from FGD investments of the privatized coal power plants...

The Bill Pertaining to Amending Income Law and Some Other Laws, which has been submitted to the Parliament by the Government PMs on July 9, 2019 as a new income generating and savings provider economy package, was approved at the General Assembly of the Parliament. The important articles and regulations covered in the Bill are given below.

Large-scale projects are granted time extension:

It is stipulated in the article 30 of the Bill that large-scale projects will be granted time extension if the required legal and financial infrastructure is established and time extension is required for the technical infrastructure activities. Accordingly, the provisional article 26 titled "Contract time extension and transfer" is added to the Law no. 6446. This article is as follows:

"The relevant regulation is made for the relevant contracts for which a contest was organized under the relevant legislation before the effective date of this article and that are in progress as of the effective date of this article and the transfer contracts for which a privatization tender was organized and that are in progress as of the effective date of this article. Accordingly, the durations stipulated for the rights and liabilities under the electricity sales agreements shall be extended by 36 months from the effective date of this article.  If requested within the period extended under this article, the relevant contract may be transferred. In this case, the conditions in the first article except for the technology provider condition shall be sought for the company that will take over the contract. However, restrictions and sanctions arising from the transfer shall not be applicable."

As it is known, the sponsor and contractor Kalyon Enerji Yatırımları was required to complete the factory investment within June as per the SPP (Solar Power Plant) REZ (YEKA) specifications, however the company was not able to complete the investment since its partners resigned TEBA:May 21, 2019. This article allows time extension for this Project as well.

On the other hand, this article will reportedly allow time extension also for the environment-cencerned investments (FGD installations) in coal power plants which had been privatized.

As known, coal power plants of Seyitömer, Kangal, Yatağan, Kemerköy ve Yeniköy, Çatalağzı, Orhaneli, Tunçbilek and Soma B were privatized between 2013-2015. The exemption given to the companies which bought power plants with privatization will expire on December 31, 2019. The article below is reportedly will bring 36 months more time extension for this exemption. 

As can be remebered, the article extending the period for environment investments for coal power plants was withdrawn from the Blanket Law Comprising Arrangements on Energy Sector which was passed at the Parliament in February 2019. 

Those who have lost their unlicensed power generation right is granted a 30-day correction period:

The article 29 of the Bill is intended to give a new opportunity to build unlicensed power generation plants to the companies that lost their right to do so because of the termination of the link between consumption and generation.  Accordingly, this regulation is as follows under the article 25 added to the Electricity Market Law:

"For the companies whose link between consumption and generation is terminated from the date of the letter of call to the end of the connection agreement, if subscription for a new consumption plant is formed with the subscription subject to the letter of call within 30 days from the effective date of this article and notified to the relevant operator of network, the duration of connection agreement shall be considered to be extended automatically covering 120 days from the date of such notification. "

Repatriation of Capital extended until 31.12.2019

The regulation on Repatriation of Capital allows natural and legal entities to bring money, gold, foreign currency, securities and other capital market instruments overseas to Turkey by December 31, 2019. In addition, it will be allowed to register in the legal books the money, gold, foreign currency, securities and other capital market instruments as well as immovable property owned the taxpayers of income and corporate tax and located in Turkey by December 31, 2019. 1-percent tax will be collected on the value of the overseas assets notified and domestic assets declared.  The assets notified or declared under the article will not be subject to any tax inspection or penalty as long as the conditions specified in the article are fulfilled. 

10-percent reserve fund will be reserved for the Central Bank

The amendment of the paragraph that regulates the reserve fund of the Central Bank by the Article 5 stipulates that the primary reserve will not be reserved for the Central Bank, and 10 percent of the secondary reserve will be reserved for the Central Bank. The following paragraph is added to the provision: "Accumulated reserve funds except the reserve fund retained from the last year's profit can be added to the dividend and distributed."

Procedures and principles for restructuring of financial debts will be determined in a Framework Agreement

The article 16 of the Bill is intended to recover the companies that are in financial difficulty but may continue operation if their debts to the financial system are restructured, thereby increasing capacity use and employment. The debts of the companies to be covered by financial restructuring should be able to pay their debts in a reasonable period of time. According to the article, this will be inspected by independent audit companies. The measures that may be taken under the regulation are clarified and it is stipulated that the provisions of the said law will be implemented comparatively for the goods subject to financial lease contracts to ensure harmony with the enforcement and bankruptcy law. 

The article 16 of the Bill and the provisional article 32 of the banking law include the regulations on this matter. According to this, banks, financial leasing companies, factoring companies and funding companies operating in Turkey as well as debtors that are in a credit relation with the other financial organizations defined in the said article and determined by the framework agreements prepared by the regulation made by the authority may be subject to restructuring to fulfill their repayment liabilities for the credits that are made available to them. Procedures and principles of financial restructuring to be made as per the said article will be made out by the framework agreements to be prepared within the framework of the regulations to be made by the authority. The provisions of this article shall be in effect for 2 years from the publication of this article. The President will be authorized to extend this period.

The following organizations will be the creditors under the restructuring;

The banks mentioned in the article 3 of this law, financial leasing, factoring and financing companies mentioned in the law no. 6361 dated November 21, 2012, companies mentioned in the third article of the law, banks and financial organizations based overseas, which directly extended loans to debtors, multi-party banks and organizations that have directly invested in Turkey, special-purpose companies to be established by creditors, and mutual funds established as per the capital market law. 

It is reported that debtors that are decided not to be able to repay their debt will not be covered by financial restructuring.

The duration to be granted for Biomass under the YEKDEM is announced:

It is stipulated in the article 15 of the Bill that the durations specified in the Renewable Energy Resource Areas Subsidy Mechanism (YEKDEM) will start on the date on which production plants added to the definition of biomass under the law no. 6719. 

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